The Kinked Demand Curve: A Theory of Price Rigidity in Oligopolies

The kinked demand curve is a theoretical concept used in microeconomics to explain price rigidity in oligopolistic markets. It proposes that the demand curve faced by a firm in an oligopoly has a sharp “kink” or discontinuity at the prevailing market price. This kinked shape leads to differing price elasticities of demand at different price … Read more